Exhibit 99.1
Inamed Reports Second Quarter 2003 Results and
Announces Debt Retirement and Refinancing
SANTA BARBARA, Calif.--(BUSINESS WIRE)--July 30, 2003--Inamed
Corporation (Nasdaq:IMDC):
-- Total sales were $85.8 million, up 20% from $71.7 million in
the second quarter 2002
-- Diluted GAAP earnings per share were $0.56, up 51% from $0.37
in the second quarter 2002
-- Diluted cash earnings per share were $0.76, excluding
accelerated depreciation related to the manufacturing
consolidation and special charges, up 41% compared to $0.54 in
the second quarter 2002
-- New credit facility closed with significantly improved terms
and $18.3 million of debt retired ahead of scheduled maturity
Inamed Corporation (Nasdaq:IMDC), a global healthcare company,
today announced its financial results for the second quarter 2003 with
strong sales and earnings growth. In addition, the Company reported
that it retired $18.3 million of its outstanding debt ahead of its
scheduled maturity and refinanced its remaining $65 million of debt on
significantly improved terms from its previous credit facility.
"Inamed had another outstanding quarter of double-digit sales
growth led by the successful launch of our new human collagen-based
products CosmoDerm(TM) and CosmoPlast(TM), the continued growth and
acceptance of the Lap-Band(R) System and the success of the saline
matrix breast implants in the United States," said Nick Teti,
Chairman, President and Chief Executive Officer. "In addition, we made
further progress in the development of our pipeline and improved our
financial profile with the closing of our credit facility last week."
Diluted GAAP earnings per share were $0.56 in the second quarter
2003, an increase of 51% over the same period prior year.
Excluding amortization of intangibles, accelerated depreciation
related to Inamed's previously announced manufacturing consolidation
program and special charges, diluted cash earnings per share for the
second quarter 2003 were up 41% to $0.76 from $0.54 in the second
quarter 2002.
Inamed Businesses
Total sales for the second quarter 2003 were $85.8 million, up 20%
from $71.7 million in the second quarter 2002.
Inamed Health -- Obesity Intervention
Worldwide sales of obesity intervention products in the second
quarter 2003 were $15.2 million, an increase of 59% over sales in the
second quarter 2002.
Strong sales growth continued in the United States, where Inamed
has continued to expand the number of trained surgeons. In addition,
the number of lives covered by managed care reimbursement increased
during the quarter. The obesity epidemic continues to be a serious and
growing healthcare issue worldwide.
Inamed Aesthetics -- Breast
Worldwide breast aesthetics product sales in the second quarter
2003 were $47.5 million, an increase of 15% over sales in the second
quarter 2002.
Sales in the United States and Canada benefited from the continued
growth in the reconstruction and augmentation markets and from the
continued strong market acceptance of the smooth, round saline matrix
breast implants.
Inamed Aesthetics -- Facial
Worldwide facial aesthetic product sales in the second quarter
2003 were $22.2 million, an increase of 14% over sales in the second
quarter 2002.
This growth was led by the continued success of the launch in the
United States and Canada of CosmoDerm and CosmoPlast, our new human
collagen-based products, evidenced by the significant adoption by
physicians and consumers of this new breakthrough in collagen
replacement therapy.
Research and Development Pipeline
Inamed increased its strategic investment in research and
development expenditures to $5.2 million in the second quarter 2003.
These expenditures were in support of the Company's clinical
development programs, which continued to progress during the quarter:
-- Silicone Gel Breast Implants
The Company's PMA for silicone gel-filled breast implants
continues to progress through the regulatory process with the U.S.
Food and Drug Administration. Inamed achieved another milestone with
the successful FDA pre-approval inspections of the Company's silicone
breast implant manufacturing facilities.
-- Botulinum Toxin Type A
Inamed and Beaufour Ipsen completed patient follow-up for the
phase II study of our neuro-cosmeceutical botulinum toxin type A
product that was conducted in the U.S. and Canada. The Company is now
analyzing the clinical data and plans to meet with the FDA to review
the results and seek approval to begin the Phase III study in late
2003 or early 2004.
-- Hylaform(R) Dermal Filler
Inamed is in the final stages of completing the PMA for its
hyaluronic acid-based product, Hylaform. The Company expects to submit
this application to the FDA in the next few days.
Financial Results
During the second quarter 2003, Inamed recorded a 20% increase in
sales and continued to achieve solid gross profit margins. These
results, together with sustained expense management, resulted in
strong growth in operating profit, net income and earnings per share.
-- Foreign Currency Effect
Foreign exchange favorably impacted revenue by approximately $3.8
million, principally from the strengthening Euro.
-- Gross Profit Margin
The gross profit margin in the second quarter 2003 was 72%, driven
by Inamed's product mix and improved operational efficiencies.
Included in the second quarter 2003 cost of sales was $0.9 million of
accelerated depreciation expense related to the Company's previously
announced manufacturing consolidation program.
-- Sales, General and Administrative
The Company's sales, general and administrative (SG&A) expense was
$35.8 million or 42% of sales for the second quarter 2003, down from
$36.2 million or 50% of sales in the second quarter 2002.
Excluding a $2.1 million charge related to a potential settlement
of a legal dispute dating back to the mid-1990s, SG&A expense was
$33.7 million or 39% of sales for the second quarter 2003. In the
second quarter 2002, SG&A expense was $31.6 million or 44% of sales,
excluding $4.6 million in special charges recorded during the period.
-- Research and Development
The research and development expense in the second quarter 2003
was $5.2 million or 6% of sales, compared to $4.3 million in the
second quarter 2002. These expenditures were primarily in support of
the Company's clinical development programs.
-- Interest Expense
Interest expense in the second quarter 2003 was $5.1 million and
included a special charge of $3.5 million related to the Company's
debt refinancing. Excluding this amount, interest expense would have
been $1.6 million in the second quarter 2003, compared to $2.1 million
in the second quarter 2002.
Earnings Per Share
-- GAAP Earnings per Share
Inamed reported that diluted GAAP earnings per share were $0.56 in
the second quarter 2003, an increase of 51% over $0.37 in the second
quarter 2002.
-- Cash Earnings per Share
Excluding special charges, Inamed reported diluted cash EPS of
$0.76 for the second quarter 2003, an increase of 41% over $0.54 in
the second quarter 2002. Diluted cash earnings per share for the
second quarter 2003 exclude:
-- $3.5 million or $0.09 per share of special charges related
to its debt refinancing;
-- $2.1 million or $0.06 per share of special charges related
to a potential legal settlement;
-- $1.0 million or $0.03 per share of amortization of
intangibles; and
-- $0.9 million or $0.02 per share of accelerated
depreciation expense related to the Company's previously
announced manufacturing consolidation.
Special Charges
-- Debt Refinancing and Related Special Charge
Inamed also announced that it retired $18.3 million of debt ahead
of its scheduled maturity and that it refinanced its remaining $65.0
million of debt under improved terms including extending the maturity,
increasing the size of the revolving credit facility and lowering the
interest rates on borrowings.
Related to this transaction, the Company retired an "out of the
money" interest rate swap agreement, resulting in a charge of $3.5
million, which was recorded in the second quarter 2003. In addition,
the Company will record a non-cash charge of $1.2 million for the
unamortized debt issuance fees on the retired credit facility in the
third quarter 2003.
The terminated interest rate swap agreement had fixed the interest
rate at 9.82% on $39.8 million of debt. The borrowings under the new
credit facility will bear an interest rate of LIBOR (London Inter Bank
Offering Rate) plus 2.25%, approximately 3.5% at present.
-- Legal Issue and Related Special Charge
Inamed also announced that it has agreed in principle to settle
its litigation with Sager et al. involving alleged misleading
advertising that originated in the mid-1990s. As a result, the Company
recorded a special charge of $2.1 million which was included in its
SG&A expense for the quarter. This agreement in principle is subject
to the negotiation and execution of a formal settlement agreement and
approval by the court.
Conference Call
As previously announced, Inamed will host a conference call today
to discuss its second quarter 2003 financial results and key strategic
research and development programs at 4:30 p.m. Eastern Daylight Time.
Live audio of the conference call will be simultaneously broadcast
over the Internet and will be available to members of the news media,
investors and the general public. The conference call is expected to
last one hour. The event can be accessed via the Internet by going to
Inamed's website, www.inamed.com. The event will be archived and
available for replay for seven days after the conference call.
The conference call may contain forward-looking financial
information. The conference call will include a discussion of
"non-GAAP financial measures" as that term is defined in Regulation G.
The most directly comparable GAAP financial measures and information
reconciling these non-GAAP financial measures to the Company's
financial results prepared in accordance with GAAP, as well as the
other material financial and statistical information to be discussed
on the conference call, will be posted on the Company's website at
www.inamed.com.
Note Regarding Use of Non-GAAP Financial Measures
Certain of the information set forth herein, including diluted
cash EPS, may be considered non-GAAP financial measures. Inamed
believes this information is useful to investors because it provides a
basis for measuring the Company's available capital resources, the
operating performance of the Company's business and the Company's cash
flow, excluding non-recurring items that would normally be included in
the most directly comparable measures calculated and presented in
accordance with generally accepted accounting principles. The
Company's management uses these non-GAAP financial measures along with
the most directly comparable GAAP financial measures in evaluating the
Company's operating performance and capital resources and cash flow.
Non-GAAP financial measures should not be considered in isolation
from, or as a substitute for, financial information presented in
compliance with GAAP, and non-GAAP financial measures as reported by
the Company may not be comparable to similarly titled amounts reported
by other companies.
About Inamed Corporation
Inamed (Nasdaq:IMDC) is a global healthcare company with over 25
years of experience developing, manufacturing and marketing
innovative, high-quality, science-based products. Current products
include breast implants for aesthetic augmentation and for
reconstructive surgery; a range of dermal products to treat facial
wrinkles; and minimally invasive devices for obesity intervention,
including the Lap-Band System for morbid obesity. The Company's
website is www.inamed.com.
Forward-Looking Statements
This press release contains, in addition to historical
information, forward-looking statements. Such statements are based on
management's current estimates and expectations and are subject to a
number of uncertainties and risks that could cause actual results to
differ materially from those described in the forward-looking
statements. Inamed is providing this information as of July 30, 2003,
and expressly disclaims any duty to update information contained in
this press release.
This press release contains projections and other forward-looking
statements, including, without limitation, express and implied
statements regarding Inamed's anticipated sales, operating results,
expenses, capital expenditures, research and development,
manufacturing consolidation, product development and regulatory
approval, debt financing and legal settlements. These forward-looking
statements involve risks and uncertainties which could cause actual
results to differ materially from those expressed or implied here.
Readers are referred to the documents filed by Inamed with the
Securities and Exchange Commission, specifically the most recent
reports which identify important risk factors that could cause actual
results to differ from those contained in the forward-looking
statements, including but not limited to: exposure to product
liability and intellectual property claims; exposure to liabilities
that may not be adequately covered by insurance or for which there is
no insurance; potential negative publicity concerning product safety;
potential fluctuations in quarterly and annual results; the effect of
changing accounting and public reporting rules and regulations;
volatility of Inamed's stock price; changes in the economy and
consumer spending; competition from existing and/or new products;
failure or delay of clinical trials; uncertainty in receiving timely
regulatory approval or market acceptance for new products; dependence
on a single supplier for each of Inamed's silicone raw materials and
bovine and human collagen-based products; failure to protect Inamed's
intellectual property; adverse changes in the regulatory or
legislative environment (both in the U.S. and internationally)
affecting our business; and failure of our collaborative partners to
perform. The information contained in this press release is a
statement of Inamed's present intention, belief or expectation and is
based upon, among other things, the existing regulatory environment,
industry conditions, market conditions and prices, the economy in
general and Inamed's assumptions. Inamed may change its intention,
belief or expectation, at any time and without notice, based upon any
changes in such factors, in Inamed's assumptions or otherwise. Inamed
undertakes no obligation to review or confirm analysts' expectations
or estimates or to release publicly any revisions to any
forward-looking statements to reflect events or circumstances after
the date hereof or to reflect the occurrence of unanticipated events.
By including any information in this press release, Inamed does
not necessarily acknowledge that disclosure of such information is
required by applicable law or that the information is material.
INAMED CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in millions)
June 30, December 31,
2003 2002
Assets
Current assets:
Cash and cash equivalents $85.0 $39.3
Trade accounts receivable, net of allowances
of $14.3 and $11.0 in 2003 and 2002,
respectively 54.9 45.4
Inventories 44.0 43.0
Prepaid expenses and other current assets 27.5 28.2
Total current assets 211.4 155.9
Property and equipment, net 47.9 48.4
Other assets 231.9 235.1
Total Assets $491.2 $439.4
Liabilities and Stockholders' Equity
Current liabilities $97.6 $74.5
Non-current liabilities 109.4 132.2
Stockholders' equity 284.2 232.7
Total Liabilities and Stockholders' Equity $491.2 $439.4
INAMED CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(millions, except per share data)
Three Three
Months Months
Ended Ended
June 30, June 30,
2003 2002
Net sales $85.8 $71.7
Cost of goods sold 24.1 19.5
Gross profit 61.7 52.2
Operating expenses:
Selling, general and administrative 35.8 36.2
Research and development 5.2 4.3
Amortization of intangible assets and non-cash
compensation 1.0 1.3
Total operating expenses 42.0 41.8
Operating income 19.7 10.4
Other income (expense):
Net interest expense and debt costs (5.1) (2.1)
Foreign currency transaction gains 0.4 0.4
Royalty income and other 1.1 1.3
Total other expense (3.6) (0.4)
Income before income tax expense 16.1 10.0
Income tax expense 3.3 1.8
Net income $12.8 $8.2
Net income per share of common stock:
Basic EPS $0.57 $0.40
Diluted EPS $0.56 $0.37
Weighted average shares outstanding:
Basic 22.5 20.7
Diluted 23.0 22.0
Note: Certain items in the prior year consolidated financial
statements have been reclassified to conform with the current year
presentation.
INAMED CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(millions, except per share data)
Six Months Six Months
Ended Ended
June 30, June 30,
2003 2002
Net sales $161.3 $134.9
Cost of goods sold 45.5 38.1
Gross profit 115.8 96.8
Operating expenses:
Selling, general and administrative 67.0 63.4
Research and development 10.8 7.4
Amortization of intangible assets and non-cash
compensation 2.0 2.7
Total operating expenses 79.8 73.5
Operating income 36.0 23.3
Other income (expense):
Net interest expense and debt costs (6.9) (4.9)
Foreign currency transaction gains 0.6 0.9
Royalty income and other 2.1 2.6
Total other expense (4.2) (1.4)
Income before income tax expense 31.8 21.9
Income tax expense 7.1 5.4
Net income $24.7 $16.5
Net income per share of common stock:
Basic EPS $1.11 $0.80
Diluted EPS $1.09 $0.76
Weighted average shares outstanding:
Basic 22.3 20.5
Diluted 22.7 21.8
Note: Certain items in the prior year consolidated financial
statements have been reclassified to conform with the current year
presentation.
INAMED CORPORATION AND SUBSIDIARIES
SALES BY PRODUCT LINE
(unaudited)
(millions)
Three Months Three Months
Ended Ended Growth
June 30, 2003 June 30, 2002 Rates
Sales by product line
Breast aesthetics $47.5 $41.5 15 %
Facial aesthetics 22.2 19.6 14 %
Health 15.2 9.5 59 %
Other (a) 0.9 1.1 (18)%
Total $85.8 $71.7 20 %
(a) Other includes ongoing sales to other medical manufacturers
(principally sales of Contigen(R))
INAMED CORPORATION AND SUBSIDIARIES
SALES BY PRODUCT LINE
(unaudited)
(millions)
Six Months Six Months
Ended Ended Growth
June 30, 2003 June 30, 2002 Rates
Sales by product line
Breast aesthetics $89.9 $78.6 14 %
Facial aesthetics 40.0 36.1 11 %
Health 29.2 17.4 68 %
Other (a) 2.2 2.8 (21)%
Total $161.3 $134.9 20 %
(a) Other includes ongoing sales to other medical manufacturers
(principally sales of Contigen(R))
INAMED CORPORATION AND SUBSIDIARIES
EARNINGS PER SHARE RECONCILIATION
(unaudited)
(millions, except per share data)
Three Three
Months Months
Ended Ended
June 30, June 30,
2003 2002
Earnings for per share calculations
Net income $12.8 $8.2
Deductible amortization and non-cash compensation 1.0 1.3
Tax effect (0.4) (0.5)
Accelerated depreciation (a) 0.9 -
Tax effect (0.3) -
Special charges (b) 5.6 4.6
Tax effect (2.2) (1.8)
Cash earnings excluding special charges $17.4 $11.8
Earnings per share
Diluted EPS $0.56 $0.37
Amortization and non-cash compensation, net of tax 0.03 0.04
Accelerated depreciation, net of tax 0.02 -
Special charges, net of tax (c) 0.15 0.13
Cash EPS excluding special charges $0.76 $0.54
NOTE: Tax effects in 2003 and 2002 were computed at 40%.
(a) Accelerated depreciation is related to the manufacturing
consolidation and is recorded in cost of goods sold.
(b) Special charges include the following:
Litigation settlement (included in SG&A) $2.1 $-
Interest rate swap charges (included in net
interest expense) 3.5 -
Investment impairment (included in SG&A) - 3.0
Inventory impairment (included in SG&A) - 0.3
Sales tax liability (included in SG&A) - 1.3
$5.6 $4.6
(c) Earnings per share impact of special charges
Litigation settlement (included in SG&A) $0.06 $-
Interest rate swap charges (included in net
interest expense) 0.09 -
Investment impairment (included in SG&A) - 0.08
Inventory impairment (included in SG&A) - 0.01
Sales tax liability (included in SG&A) - 0.04
$0.15 $0.13
INAMED CORPORATION AND SUBSIDIARIES
EARNINGS PER SHARE RECONCILIATION
(unaudited)
(millions, except per share data)
Six Six
Months Months
Ended Ended
June 30, June 30,
2003 2002
Earnings for Per Share Calculations
Net income $24.7 $16.5
Deductible amortization and non-cash compensation 2.0 2.7
Tax effect (0.8) (1.1)
Accelerated depreciation (a) 1.8 -
Tax effect (0.7) -
Special charges (b) 5.6 5.7
Tax effect (2.2) (2.2)
Cash earnings excluding special charges $30.4 $21.6
Earnings Per Share
Diluted EPS $1.09 $0.76
Amortization and non-cash compensation, net of tax 0.05 0.07
Accelerated depreciation, net of tax 0.05 -
Special charges, net of tax (c) 0.15 0.16
Cash EPS excluding special charges $1.34 $0.99
NOTE: Tax effects in 2003 and 2002 were computed at 40%.
(a) Accelerated depreciation is related to the manufacturing
consolidation and is recorded in cost of goods sold.
(b) Special charges include the following:
Litigation settlement (included in SG&A) $2.1 $1.1
Interest rate swap charges (included in net
interest expense) 3.5 -
Investment impairment (included in SG&A) - 3.0
Inventory impairment (included in SG&A) - 0.3
Sales tax liability (included in SG&A) - 1.3
$5.6 $5.7
(c) Earnings per share impact of special charges
Litigation settlement (included in SG&A) $0.06 $0.03
Interest rate swap charges (included in net
interest expense) 0.09 -
Investment impairment (included in SG&A) - 0.08
Inventory impairment (included in SG&A) - 0.01
Sales tax liability (included in SG&A) - 0.04
$0.15 $0.16
CONTACT: Inamed Corporation
Robert S. Vaters, 805-692-5420